I can’t take credit for this one. I saw this from John Kurisko for the settings on the Stochastics but he trades it a very different way than I use it. He is short term (1 minute time frame scalper). I view this as an option to apply cycle theory to a chart. Notice how when all variations of the stochastics line up in extreme territory there is usually an explosive reversal. The concept is simple and need not be over thought. Essentially what is happening is multiple time frames are all agreeing on the condition of the market whether it be overbought or oversold. Also notice, if you can be patient enough, there may be a divergence in one or more of the stochastic variations which adds fuel to the fire.
So when the stars align on these trades, I would look for a reversal candlestick pattern followed by a trend line break and enter a position once all the conditions are met. Even if you don’t get a classic candlestick reversal, a trend line break should be sufficient.
Stop loss would be a new closing high/low or 1-3 ATR stop.
This is can be a good trade because it has asymmetric risk.
So when the stars align on these trades, I would look for a reversal candlestick pattern followed by a trend line break and enter a position once all the conditions are met. Even if you don’t get a classic candlestick reversal, a trend line break should be sufficient.
Stop loss would be a new closing high/low or 1-3 ATR stop.
This is can be a good trade because it has asymmetric risk.
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Disclaimer
The information and publications are not meant to be, and do not constitute, financial, investment, trading, or other types of advice or recommendations supplied or endorsed by TradingView. Read more in the Terms of Use.